This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.Need a new registration confirmation email? Click here

EXCO Resources, Inc. Reports Third Quarter 2012 Results

TGGT's capital spending for the third quarter of 2012 was $11 million and total capital spending for the first nine months of 2012 was $108 million. We expect TGGT will spend approximately $24 million during the fourth quarter 2012. The additional capital spending will be primarily in the Holly area and legacy East Texas areas associated with pipeline laterals, permanent treating facilities and well connects for third party producers.

Financial Data

Our consolidated balance sheets as of September 30, 2012 and December 31, 2011 and consolidated statements of operations for the three and nine months ended September 30, 2012 and 2011, and consolidated statements of cash flows for the nine months ended September 30, 2012 and 2011, are included on the following pages. We have also included reconciliations of non-GAAP financial measures referred to in this press release which have not been previously reconciled.

EXCO will host a conference call on Tuesday, October 30, 2012 at 8:00 a.m. (Dallas time) to discuss the contents of this release and respond to questions. Please call (800) 309-5788 if you wish to participate, and ask for the EXCO conference call ID# 30479650. The conference call will also be webcast on EXCO’s website at
www.excoresources.com under the Investor Relations tab. Presentation materials related to this release will be posted, after market close, on EXCO’s website on Monday, October 29, 2012.

A digital recording will be available starting two hours after the completion of the conference call until 11:59 p.m., November 13, 2012. Please call (800) 585-8367 and enter conference ID# 30479650 to hear the recording. A digital recording of the conference call will also be available on EXCO’s website.

We believe that it is important to communicate our expectations of future performance to our investors.However, events may occur in the future that we are unable to accurately predict, or over which we have no control.You are cautioned not to place undue reliance on a forward-looking statement.When considering our forward-looking statements, keep in mind the risk factors and other cautionary statements in this press release and the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2011, and our other periodic filings with the SEC.

Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prevailing prices for oil and natural gas.A decline in oil and/or natural gas prices could have a material adverse effect on the estimated value and estimated quantities of our oil and natural gas reserves, our ability to fund our operations and our financial condition, cash flow, results of operations and access to capital.Historically, oil and natural gas prices and markets have been volatile, with prices fluctuating widely, and they are likely to continue to be volatile.

The SEC permits oil and natural gas companies in filings made with the SEC to disclose proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. The SEC permits optional disclosure of “probable” and “possible” reserves in its filings with the SEC. EXCO may use broader terms to describe additional reserve opportunities such as “potential,” “unproved,” or “unbooked potential,” to describe volumes of reserves potentially recoverable through additional drilling or recovery techniques that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. These estimates are by their nature more speculative than estimates of proved, probable or possible reserves and accordingly are subject to substantially greater risk of actually being realized by the company. While we believe our calculations of unproved drillsites and estimation of unproved reserves have been appropriately risked and are reasonable, such calculations and estimates have not been reviewed by third party engineers or appraisers. Investors are urged to consider closely the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2011, which is available on our website at www.excoresources.com under the Investor Relations tab.

EXCO Resources, Inc.

Consolidated balance sheets

(in thousands)

September 30, 2012

December 31, 2011

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$

73,553

$

31,997

Restricted cash

67,306

155,925

Accounts receivable, net:

Oil and natural gas

63,443

88,518

Joint interest

58,886

170,918

Other

31,755

28,488

Inventory

6,591

8,345

Derivative financial instruments

57,997

164,002

Other

17,098

29,815

Total current assets

376,629

678,008

Equity investments

336,495

302,833

Oil and natural gas properties (full cost accounting method):

Unproved oil and natural gas properties and development costs not being amortized

Amortization of deferred financing costs and discount on the 2018 Notes

1,671

2,571

8,111

6,318

Deferred income taxes

—

—

—

—

Non-recurring other operating items

—

(15,858

)

(8,625

)

(21,813

)

Changes in working capital

27,382

(7,811

)

124,316

(39,422

)

Net cash provided by operating activities

$

134,309

$

127,301

$

414,777

$

355,334

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2012

2011

2012

2011

Statement of cash flow data (unaudited):

Cash flow provided by (used in):

Operating activities

$

134,309

$

127,301

$

414,777

$

355,334

Investing activities

(105,642

)

(249,217

)

(307,253

)

(446,402

)

Financing activities

(7,510

)

113,148

(65,968

)

103,257

Other financial and operating data:

EBITDA(1)

(257,650

)

200,526

(821,680

)

486,666

Adjusted EBITDA(1)

123,191

163,489

346,043

453,836

(1)

Earnings before interest, taxes, depreciation, depletion and amortization, or “EBITDA” represents net income adjusted to exclude interest expense, income taxes and depreciation, depletion and amortization. “Adjusted EBITDA” represents EBITDA adjusted to exclude non-recurring other operating items, accretion of discount on asset retirement obligations, non-cash changes in the fair value of derivatives, non-cash write-downs of assets, stock-based compensation and income or losses from equity method investments. We have presented EBITDA and Adjusted EBITDA because they are a widely used measure by investors, analysts and rating agencies for valuations, peer comparisons and investment recommendations. In addition, these measures are used in covenant calculations required under our credit agreement and the indenture governing our 7.5% senior notes due September 15, 2018. Compliance with the liquidity and debt incurrence covenants included in these agreements is considered material to us. Our computations of EBITDA and Adjusted EBITDA may differ from computations of similarly titled measures of other companies due to differences in the inclusion or exclusion of items in our computations as compared to those of others. EBITDA and Adjusted EBITDA are measures that are not prescribed by generally accepted accounting principles, or GAAP. EBITDA and Adjusted EBITDA specifically exclude changes in working capital, capital expenditures and other items that are set forth on a cash flow statement presentation of a company’s operating, investing and financing activities. As such, we encourage investors not to use these measures as substitutes for the determination of net income, net cash provided by operating activities or other similar GAAP measures.

TGGT Holdings, LLC

EBITDA and Adjusted EBITDA reconciliation

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2012

2011

2012

2011

Equity income (loss)

$

12,894

$

10,666

$

20,021

$

22,749

Amortization of the difference in the historical basis of our contribution to TGGT

(402

)

(402

)

(1,206

)

(1,206

)

Equity (gain) loss of other investments

(1,309

)

(574

)

1,285

56

EXCO's share of TGGT net income

11,183

9,690

20,100

21,599

BG Group's share of TGGT net income

11,183

9,690

20,100

21,599

TGGT net income

22,366

19,380

40,200

43,198

Interest expense

5,356

2,302

11,913

6,169

Margin tax expense

32

399

300

1,118

Depreciation and amortization

8,967

6,769

23,790

19,001

TGGT EBITDA(1)

36,721

28,850

76,203

69,486

Asset impairments and non-recurring other operating items

5,767

(167

)

43,365

13,293

TGGT Adjusted EBITDA(1)

$

42,488

$

28,683

$

119,568

$

82,779

EXCO's share of TGGT Adjusted EBITDA (2)

$

21,244

$

14,342

$

59,784

$

41,390

(1)

Earnings before interest, taxes, depreciation, depletion and amortization, or “EBITDA” represents net income adjusted to exclude interest expense, income taxes and depreciation and amortization. “Adjusted EBITDA” represents EBITDA adjusted to exclude asset impairments, gains and losses on divestitures and non-recurring other operating items. We have presented EBITDA and Adjusted EBITDA because they are a widely used measure by investors, analysts and rating agencies for valuations, peer comparisons and investment recommendations. Our computations of EBITDA and Adjusted EBITDA may differ from computations of similarly titled measures of other companies due to differences in the inclusion or exclusion of items in our computations as compared to those of others. EBITDA and Adjusted EBITDA are measures that are not prescribed by generally accepted accounting principles, or GAAP. EBITDA and Adjusted EBITDA specifically exclude changes in working capital, capital expenditures and other items that are set forth on a cash flow statement presentation of a company’s operating, investing and financing activities. As such, we encourage investors not to use these measures as substitutes for the determination of net income, net cash provided by operating activities or other similar GAAP measures.

(2)

Represents our 50% equity share in TGGT.

TGGT Holdings, LLC

Computation of adjusted net income

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in thousands)

2012

2011

2012

2011

Net income, GAAP

$

22,366

$

19,380

$

40,200

$

43,198

Adjustments:

Loss on asset disposal

241

50

1,640

1,415

Asset impairment, net of insurance recoveries

4,618

(2,917

)

39,961

9,178

Other non-cash items

908

2,700

1,764

2,700

Income taxes on above adjustments

—

—

—

—

Total adjustments, net of taxes

5,767

(167

)

43,365

13,293

Adjusted net income

$

28,133

$

19,213

$

83,565

$

56,491

EXCO's 50% share of TGGT's adjusted net income (1)

$

14,067

$

9,607

$

41,783

$

28,246

(1)

TGGT’s net income, computed in accordance with GAAP, includes certain items not typically included by securities analysts in published estimates of financial results. This table provides a reconciliation of GAAP net income to a non-GAAP measure of adjusted net income.

Product Features:

To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.